Correlation Between Xian International and Bloomage Biotechnology

Can any of the company-specific risk be diversified away by investing in both Xian International and Bloomage Biotechnology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Xian International and Bloomage Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xian International Medical and Bloomage Biotechnology Corp, you can compare the effects of market volatilities on Xian International and Bloomage Biotechnology and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Xian International with a short position of Bloomage Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xian International and Bloomage Biotechnology.

Diversification Opportunities for Xian International and Bloomage Biotechnology

0.75

Correlation Coefficient

Xian International  Bloomage Biotechnology

Poor diversification

The 3 months correlation between Xian and Bloomage is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Xian International Medical and Bloomage Biotechnology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomage Biotechnology and Xian International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Xian International Medical are associated (or correlated) with Bloomage Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomage Biotechnology has no effect on the direction of Xian International i.e., Xian International and Bloomage Biotechnology go up and down completely randomly.

Pair Corralation between Xian International and Bloomage Biotechnology

Assuming the 90 days trading horizon Xian International Medical is expected to generate 1.16 times more return on investment than Bloomage Biotechnology. However, Xian International is 1.16 times more volatile than Bloomage Biotechnology Corp. It trades about 0.09 of its potential returns per unit of risk. Bloomage Biotechnology Corp is currently generating about -0.07 per unit of risk. If you would invest  557.00  in Xian International Medical on September 19, 2024 and sell it today you would earn a total of  26.00  from holding Xian International Medical or generate 4.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Xian International Medical  vs.  Bloomage Biotechnology Corp

Xian International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xian International Medical are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xian International sustained solid returns over the last few months and may actually be approaching a breakup point.

Bloomage Biotechnology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bloomage Biotechnology Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bloomage Biotechnology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xian International and Bloomage Biotechnology

The main advantage of trading using opposite Xian International and Bloomage Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xian International position performs unexpectedly, Bloomage Biotechnology can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bloomage Biotechnology will offset losses from the drop in Bloomage Biotechnology's long position.

The idea behind Xian International Medical and Bloomage Biotechnology Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.